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Minnesota Attorney General Sues National Arbitration Forum

The Minnesota Attorney General has filed a lawsuit against National Arbitration Forum, one of the largest domain name dispute providers under UDRP. The lawsuit does not pertain to domain arbitration, but instead to credit and collection disputes.

The Attorney General alleges “that [National Arbitration Forum] misrepresented its independence and hid from consumers and the public its extensive ties to the collection industry.”

In most credit card terms and conditions, credit card users agree to arbitration in the event of a credit card dispute. According to a press release from the Attorney General:

“The company tells consumers, the public, courts, and the government that it is independent and operates like an impartial court system. In fact, it has extensive ties to the collection industryâ€”ties that it hides from the public,â€ said Attorney General Swanson.

The lawsuit alleges that the National Arbitration Forum, while holding itself out as impartial, works behind the scenesâ€”alongside creditors and against the interests of ordinary consumersâ€”to convince credit card companies and other creditors to insert arbitration provisions in their customer agreements and then appointing the Forum to decide the disputes. The lawsuit alleges that the Forum pays commissions to executives whose job it is to convince creditors to put mandatory arbitration clauses in their customer agreements. The suit alleges that the Forum does this to generate arbitration filings in the Forumâ€”and hence, revenueâ€”for itself.

National Arbitration Forum has posted a media statement about the lawsuit, essentially saying that it is independent.

In 2006 NAF processed 214,000 consumer collection arbitrage claims, according to the lawsuit. That makes the low four figure number of domain arbitration cases seem like small potatoes.

We all sure have seen a lot of generic domains that should have never made it past the review process at the NAF go ahead and be filed for a UDRP arbitration case. If they are impartial it does not show. Their actions have been nothing short of absurd in the domain realm when it comes to protecting individual domain owners.

I’d like to see a list of the cases they did not approve for UDRP…..if there is even any. Does anyone know where a list of unapproved UDRP cases can be found? That would be enlightening. 🙂

So far, from what I have seen with my own eyes is that it is all about the application fees every time.

Domain disputes may be a pittance of their income, but if they scale this arbitration behavior across enough industries they then have a money cow.

Unfortunately, this is an attorney general that has been slammed (and hard) for busting a union in her office. The Minnesota Legislative Auditor confirmed last year that she had ordered attorneys to falsify affidavits, file meritless lawsuits for good press, etc. She’s a bad apple, and while I’m no fan of NAF, I think it’s unfortunate that progressives are willing to turn a blind eye to the awful things that Lori Swanson has done in her office just because we dislike NAF. NAF is terrible, but Lori Swanson has shown that her tactics aren’t any better.